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Providing Private Equity Solutions Kiriga Kunyiha Aureos East Africa 22nd March 2006 Aureos Inception Aureos Capital is a 50:50 joint venture between Norfund and CDC 50% 50% Aureos is a leading private equity fund manager investing in the SME sector in emerging markets around the world The Aureos Global Network Over US$ 500m under management globally, with US$ 72m in EA (AEAF, ACACIA and FEDHA) LONDON EL SALVADOR COSTA RICA DOMINICAN REPUBLIC CHINA VIETNAM INDIA SENEGAL GHANA UGANDA NIGERIA KENYA TANZANIA SRI LANKA PHILLIPINES THAILAND PAPUA NEW GUINEA MAURITIUS ZAMBIA MOZAMBIQUE ZIMBABWE SOUTH AFRICA AUSTRALIA (PACIFIC ISLANDS) Our African Presence Close to half our committed capital has been allocated for investment opportunities across Sub-Saharan Africa Aureos West Africa Fund (US$ 50 million) Target countries: Nigeria, Ghana, Côte d’Ivoire, Senegal. Other countries: Mali, Gambia, Benin, Togo, and other ECOWAS Aureos Southern Africa Fund (US$ 60 million) Target countries: RSA, Zambia, Mozambique, Zimbabwe. Other countries: Botswana, Namibia, Angola, Mauritius. Aureos East Africa Fund (US$ 40 million) Target countries: Kenya, Tanzania, Uganda Other countries: Ethiopia, Rwanda. Representative Investments Aureos has made a number of investments across in different sectors across the region What is Private Equity “PE” • PE is medium to long-term risk capital provided in return for an equity stake in potentially high growth unquoted companies Sponsors Equity Institutional equity capital Quasi- equity Subordinated debt Secured bank debt PE fills the gap between sponsors injection of their own cash and bank debt. Risk capital packages often tend to be a blend of equity and debt PE Around the world • PE industry well established in the US and Europe with funds under management in excess of US$ 250 billion • In 2004 according to EVCA, PE firms in Europe invested over US$ 50 billion into 10,000 potential high growth companies. The current European portfolio stands at over US$ 200 billion (at cost) • Studies have found that PE backed companies tend to outperform their counterparts Advantages of PE Funding • Provision of Capital – PE investors provide medium to long term capital to facilitate growth and/ or enabling Management participation through buy outs/ buy ins. • Improved corporate governance – PE investors help their investee companies transition from informally run businesses to professionally managed organisations with the commensurate benefits of better management control and focus • Access to third party capital – PE investors have extensive contacts with financiers to mobilise external sources of capital for their Investees. Companies with PE investors attain the appropriate credibility to access the financial markets (debt or equity). Aureos Investment Criteria Aureos tends to invest in businesses with the following characteristics Experienced management teams with track record of success Regional growth ambitions Adherence to Aureos’ corporate governance standards Alignment with AEAF on exit rights and shareholder protections AEAF risk capital package includes blend of equity and debt AEAF will commit between US$0.5 million to US$4 million of risk capital per investment AEAF partners with experienced, successful management teams to build strong regional companies in East Africa AEAF Target Transaction Type Expansion of profitable businesses, often regional Working with large family groups to hive off and institutionalise independent business units Industry consolidations / mergers & acquisitions Change of control transactions Management Buy Outs (MBOs) Management Buy Ins (MBIs) Co-investment opportunities with strategic investors Expansion / MBO transactions are most preferred deal types Why Aureos? Partnering philosophy Strong track record of private equity transactions in East Africa Focus on helping skilled managers build world-class companies On ground local presence Backed by a blue-chip investor base Provide more than just Capital